Medicare is collapsing

Medicare and Social Security programs are likely to be ruined by privatization schemes. Experts predicted collapse for both the programs when the generation of post World War II baby-boomers retires.

Overall health care system in the USA is far from satisfactory. What do the Emir of Kuwait and the working poor of the United States have in common? Not much, except when it comes to paying for health care in the United States. They all pay the highest price: up to 500% more than the hospital receives from insured patients.

That’s because hospitals negotiate discounts with big institutions like insurance companies, HMOs or the government that require payment of only a fraction of the listed charges. Those institutions have substantial bargaining power and can guarantee hospitals a certain number of patients.

Uninsured people, on the other hand, have no bargaining power and are left to fend for themselves once they get their bills.

Jennifer Kankiewicz was rushed to New York’s Beth Israel Hospital in July 2002 for an emergency appendectomy and was hospitalized for two days. “I waited through a day’s worth of not being able to get out of bed because I didn’t have health insurance,” recalls Kankiewicz. “The next day, a friend drove me to the hospital in an emergency and we went to the closest hospital we knew of.”

Kankiewicz had an emergency appendectomy. “They provided great service,” she says. The hospital “reassured me that I could apply for Medicaid assistance. So I thought, maybe Medicaid would help me with the $24,000 that it cost me.”

Though Kankiewicz is poor, she was not poor enough. She was denied Medicaid assistance because she makes $19,000 a year. In order to qualify for Medicaid, Kankiewicz either needed to be pregnant, disabled or earn less than $350 a week. Though she was able to convince her surgeon to slightly reduce the charges, she still faces over $19,000 in hospital bills, more than her annual salary.

She says she is being billed by six separate billing groups and, unlike the big insurance companies, Kankiewicz has no negotiating power with the hospital or its collection agencies. “It’s like sending a guppy out to the sharks,” says Elisabeth Benjamin, the supervising attorney of the Health Law Unit at the Legal Aid Society in New York. “It’s just not fair.”

Several states operate a funding pool for hospitals to offset the money they spend on charity care as well as bad debt. In New York, these funds total almost $1 billion a year.

Benjamin is the author of a new Legal Aid report called “State Secret: How Government Fails To Ensure That Uninsured And Underinsured Patients Have Access To State Charity Funds.” The report alleges that none of the 22 hospitals surveyed in New York City have a process that would let poor or uninsured patients apply for the hundreds of millions of dollars in state government funds intended to help pay for hospital care for the needy, despite the fact that they are all receiving between $4-$60 million annually in charity care funds from the state. As a result, patients who are uninsured and have limited financial resources are forced to pay inflated prices for their care.

“An average consumer that might want to call a hospital and find out what the charity care policy is, forget it,” says Benjamin. “What we found was at all 22 [hospitals], no one had a way to actually get the state money applied to your case.”